(d) 5 any sum payable by the assessee as interest on any loan or borrowing from any public financial institution 6 or a State financial corporation or a State industrial investment corporation], in accordance with the terms and conditions of the agreement governing such loan or borrowing,] shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him: 7 Provided that nothing contained in this section shall apply in relation to any sum referred to in clause (a) 8 or clause (c)] 9 or clause (d)] which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub- section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return:] 10 Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or, before the due date as defined in the Explanation below clause (va) of subsection (1) of section 36, and where such payment has been made otherwise than in cash, the sum has been realised within fifteen days from the due date.]]

1. Substituted by the Finance Act, 1988, w. e. f. 1- 4- 1989. Prior to the substitution, clause (a) read as under:' (a) any sum payable by the assessee by way of tax or duty under any law for the time being in force, or"

10. Substituted by the Finance Act, 1989, w. e. f. 1- 4- 1989. Prior to the substitution, the second proviso, as inserted by the Finance Act, 1987, w. e. f. 1- 4- 1988, read as under:" Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid during the previous year on or before the due date as defined in the Explanation below clause (va) of sub- section (1) of section 36."

Explanation 1 1].- For the removal of doubts, it is hereby declared that where a deduction in respect of any sum refer- red to in clause (a) or clause (b) of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1983 or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him.] 2 Explanation 2.- For the purposes of clause (a), as in force at all material times," any sum payable" means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law.] 6 Explanation 4 3].- For the removal of doubts it is hereby declared that where a deduction in respect of any sum referred to in clause (c) 5 or clause (d)] of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1988 , or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him.] 6 Explanation 4.- For the purposes of this section,-

(a) " public financial institution" shall have the meaning assigned to it in section 4A of the Companies Act, 19567 (1 of 1956 );

(b) " State financial corporation" means a financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 8 (63 of 1951 );

(c) " State industrial investment corporation" means a Government company within the meaning of section 617 of the Companies Act, 1956 9 (1 of 1956 ), engaged in the business of providing long- term finance for industrial projects and approved by the Central Government under clause (viii) of sub- section (1) of section 36.]